Swiss Customs Data Indicates Gold Flowing East To West

Switzerland has just released its gold import/export figures for July and the summary below from www.goldchartsrus.com shows another big month of net exports. Swiss gold flows are worth looking at because Switzerland is home to over 5000 tonnes of refinery capacity (see this BullionStar article for more detail) as well as being a major vaulting location. Their figures can therefore give some insight into regional demand and supply and investor sentiment.

swissnet

 

In the chart below I’ve grouped flows in and out of Switzerland by key regions. The blue “other” is dominated by gold producing countries in Africa, South America and CIS and that, along with flows from Europe, are fairly consistent. This is to be expected as mines produce at a steady rate apart from those in more extreme environments where seasonal cycles are in play. The other sources of “input” metal for Swiss refineries are scrap and re-barring of existing stocks.

swissimports

 

The light and dark orange represent the West and green and yellow the East. The flows from the East are usually scrap driven whereas the Western flows, certainly out of the UK, would be large bars being re-barred into kilobars for the Asian markets.

It is clear there was a shift early this year where we see flows out of Asia and the Middle East increase dramatically with a corresponding reduction in flows from the USA and UK. Higher metal prices often results in more scrap flows from Asia, so the increase in gold prices in 2016 has been a factor behind this change. In the case of the UAE, as they are a source location for both legitimate and smuggling trade to India, as Indian demand has waned and the market there has become oversupplied (indicated by prices there going to a discount to London, see this article quoting an importing bank saying that “so far in 2016 our bullion business is down nearly 75 percent”) any stock build up by Middle East dealers would have to be liquidated.

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Speculative versus fundamental demand is something Monetary Metals also aims to identify with our  more

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Chee Hin Teh 5 years ago Member's comment

Thanks for sharing